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An Ailing Economy 1920s 
America on the verge of 
economic depression
Critical Thinking ? #1 
• What would happen if you spent more money 
than you actually had?
Don’t judge a book by its cover 
• The economy appeared to be healthy in the 
1920s 
– Rising wealth and a booming stock market gave 
Americans a false sense of faith in the economy 
– There were many red flags!
1. Industries in trouble 
• Key industries like railroads, textiles, steel barely make profit 
• Railroads lost business to new forms of transportation (trucks, buses, 
cars, etc.) 
• Mining, lumbering expanded during war; no longer in high 
demand 
• New energy sources compete with the coal industry 
• Boom industries—automobiles, construction, consumer 
goods— now weak 
• Housing market in decline
2. Farmers need support 
• During WWI, demand for crops soared 
– Farmers planted more and borrowed money for land and equipment 
– The war ended, demand fell and crop prices dropped by 40% 
• Many farmers fall into debt > banks foreclose and seize the 
property 
• Farmers defaulted on their loans, rural banks began to fail! 
• Congress tries to help with price-supports and various 
legislation, President Coolidge vetoes twice 
• “Farmers have never made money. I don’t believe we can 
do much about it” – President Coolidge
Critical Thinking ? #2 
• Should the government be responsible for 
bailing out key industries? Why or why not?
3. Consumers spend less money 
• As the 1920s progressed, Americans spending less 
– Rising prices, stagnant wages, unbalanced distribution of income, and 
overbuying on credit 
• Ever-widening gap between the rich and the poor
4. Credit crisis 
• Businesses give easy credit; 
consumers pile up large debts 
• Consumers have trouble paying off 
debt, cut back on spending
Create a political cartoon  
• Create a political cartoon or advertisement 
promoting the innovation of credit! 
• Your target audience is the every day 
consumer who is new to credit 
• Draw the political cartoon on your guided 
notes handout (there is a space provided)
5. Uneven distribution of income 
• The rich get richer, the poor get poorer 
• Almost 70% of families earn less than 
minimum for decent standard of living
6. False hope in the stock market 
• Dow Jones Industrial Average tracks state of stock market 
• Stock prices rise steadily; people rush to buy stocks, bonds 
• Many engage in speculation, buy on chance of a quick profit 
• Buying on margin—pay small percent of price, borrow rest
The Stock Market 
Crashes… 
https://www.youtube.com/watch?v=RJpLMvgUXe8
Critical Thinking ? #3 
• Imagine if you had no home to live in, no 
money to get food or clothing, and no 
government programs to assist you. What 
would you do? What would your priorities be?

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Pp an ailing economy 1920s

  • 1. An Ailing Economy 1920s America on the verge of economic depression
  • 2. Critical Thinking ? #1 • What would happen if you spent more money than you actually had?
  • 3. Don’t judge a book by its cover • The economy appeared to be healthy in the 1920s – Rising wealth and a booming stock market gave Americans a false sense of faith in the economy – There were many red flags!
  • 4. 1. Industries in trouble • Key industries like railroads, textiles, steel barely make profit • Railroads lost business to new forms of transportation (trucks, buses, cars, etc.) • Mining, lumbering expanded during war; no longer in high demand • New energy sources compete with the coal industry • Boom industries—automobiles, construction, consumer goods— now weak • Housing market in decline
  • 5. 2. Farmers need support • During WWI, demand for crops soared – Farmers planted more and borrowed money for land and equipment – The war ended, demand fell and crop prices dropped by 40% • Many farmers fall into debt > banks foreclose and seize the property • Farmers defaulted on their loans, rural banks began to fail! • Congress tries to help with price-supports and various legislation, President Coolidge vetoes twice • “Farmers have never made money. I don’t believe we can do much about it” – President Coolidge
  • 6. Critical Thinking ? #2 • Should the government be responsible for bailing out key industries? Why or why not?
  • 7. 3. Consumers spend less money • As the 1920s progressed, Americans spending less – Rising prices, stagnant wages, unbalanced distribution of income, and overbuying on credit • Ever-widening gap between the rich and the poor
  • 8. 4. Credit crisis • Businesses give easy credit; consumers pile up large debts • Consumers have trouble paying off debt, cut back on spending
  • 9. Create a political cartoon  • Create a political cartoon or advertisement promoting the innovation of credit! • Your target audience is the every day consumer who is new to credit • Draw the political cartoon on your guided notes handout (there is a space provided)
  • 10. 5. Uneven distribution of income • The rich get richer, the poor get poorer • Almost 70% of families earn less than minimum for decent standard of living
  • 11. 6. False hope in the stock market • Dow Jones Industrial Average tracks state of stock market • Stock prices rise steadily; people rush to buy stocks, bonds • Many engage in speculation, buy on chance of a quick profit • Buying on margin—pay small percent of price, borrow rest
  • 12. The Stock Market Crashes… https://www.youtube.com/watch?v=RJpLMvgUXe8
  • 13. Critical Thinking ? #3 • Imagine if you had no home to live in, no money to get food or clothing, and no government programs to assist you. What would you do? What would your priorities be?